AMD drops on downgrade

AMD slumps on analyst's note that company could lose share during K6 to Duron transition

Shares of AMD slumped 2 to 60 3/4 after an analyst downgrade Monday morning.

US Bancorp Piper Jaffray analyst Ashok Kumar said in a note that the firm could lose share during its transition from K6 to Duron processors.

"While the budget processor was launched in June, it has largely missed the back-to-school market and will not hit shelves till the holiday season," Kumar wrote in a note to investors. "The company is having trouble ramping the part because it has a bigger die size than K6-2, and they do not have much excess capacity currently."

Kumar lowered the stock to neutral.

He also expressed concern over the fact that AMD uses different packaging formats across its chip lines, as opposed to competitor Intel. "PC makers pondering a switch to Athlon/Duron must wonder whether to wait for AMD to settle on a single socket," Kumar wrote.

"As such, AMD is expected to see its 30 percent share erode in the value segment. The company also risks erosion of the seven percent share in the lucrative performance segment as Intel ramps up P4. AMD will not have its next generation SledgeHammer in production until late 2001."

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